More people this year than in 2011 cite public equities as their favorite investment by asset class because of healthy returns on the vehicles, according to new research.
Tiger 21, a New York-based peer-to-peer learning network for high net worth investors, disclosed this finding in a survey of its 200-plus North American members, who collectively represent more than $19 billion in investable assets. The survey asked TIGER 21 members to name their favorite investments and the percentage of their portfolios allocated to those investments.
Members also named the investment funds and managers they preferred to invest with.
The percentage of members indicating that their favorite investment category is public equities rose to 39 percent this year from 31 percent in 2011. Following public equities as the most favored investment, 19 percent of Tiger 21 members surveyed selected hedge funds, 15 percent flagged investments in private equity, and 11 percent picked investments in real estate.
Less popular are fixed income investments, cited by 8 percent of the members, cash and cash equivalents (4 percent) and commodities (3 percent).
The survey adds that 2012 marks the third consecutive year that equity-themed investments ranked as the members’ favorite, although allocations to vehicles within this space have shifted from prior years. For members listing individual stock purchases as their favorite investment, this category decreased to 43 percent this year from about 50 percent last year.
However, members listing investments in exchange-traded funds and index funds as favorites saw this category increase four percentage points to 23 percent this year. SPDR S&P 500, an ETF, was named as the second most popular equity pick this year; five other ETFs also were in the top 20 favorite equity picks.
The third most favored method for gaining exposure to equity-themed investment strategies was hedge funds, cited by 21 percent of members. Investments in equities through vehicles such as mutual funds increased to 13 percent in this year’s report, the survey states.
Notable in the equities investment category is the continued appeal of master limited partnerships (MLPs), which provide tax benefits of a limited partnership with the liquidity of publicly traded securities. Members invested in MLPs either through MLP funds, direct investments into MLP equities, or baskets of equities managed by advisors, the survey finds.
Nearly one in five of the survey respondents (19 percent) selected hedge funds as one of their favorite investments. By investment strategy, equity long/short funds made up 35 percent of hedge funds mentioned by members.
Event-driven funds followed at 18 percent, with macro and multi-strategy funds each garnering 15 percent and relative value and fund of funds each with 9 percent.
Fifteen percent of the respondents flagged private equity as their favorite investment, the survey adds.